FX.co ★ What caused cryptocurrency prices to fall?

According to CoinShares, there has been a massive outflow of investments from cryptocurrency funds in the last three weeks of 2021, although it has been a year of a strong influx in digital asset investment products.

Last week, outflows from the sector totaled $ 32 million, resulting in $ 260 million over the past three weeks. This downward trend has continued after record weekly outflows in mid-December.

Overall, capital inflows in 2021 amounted to $9.3 billion, which is 36% more than in 2020, as the launch of Bitcoin ETFs attracted large institutional investors. For comparison, the growth in inflow from 2019 to 2020 was 806%.

According to CoinShares investment strategist James Butterfill, the total assets by the end of 2021 amounted to $ 62.5 billion against $ 2.8 billion by the end of 2019. This speaks of a growing industry.

Moreover, they reported that Ethereum inflows doubled to $ 1.3 billion in 2021 from $ 920 million in 2020, while Bitcoin gained 16% or to $ 6.3 billion, which is the lowest growth in inflows compared to any digital asset investment product.

Blockchain data provider Glassnode stated in its latest research report that across many on-chain dimensions, there is a general lack of activity in Bitcoin despite a bullish tone in supply dynamics. Moreover, bitcoins continue to migrate to inactive wallets.

CoinShares noted that the total supply of coins in the form of an investment product increased from 9 to 15 in 2021, while 37 investment products were launched compared to 24 in 2020, indicating the demand and popularity of digital assets.

Assets managed by the two largest digital asset management companies Grayscale and Coinshares amounted to $43.23 billion and $4.2 billion, respectively.